A Bill to exempt cryptocurrencies and certain digital tokens has been introduced in the Colorado Senate. The move is aimed to remove “regulatory uncertainty” that could hold back firms offering marketplaces for tokens and others aiming to fundraise using crypto assets.
Currently, companies that seek to issue, buy, sell or transfer digital tokens with a consumptive purpose face regulatory uncertainty under Colorado’s current securities laws.
The bipartisan “Colorado Digital Token Act,” tabled by Senators Stephen Fenberg (Democrat) and Jack Tate (Republican), provides limited exemptions to persons dealing in digital tokens from the securities registration and securities broker-dealer and salesperson licensing requirements.
The Bill proposes that digital tokens with a “primarily consumptive” purpose should be exempted from securities laws provided they are not marketed for “speculative or investment” purposes.
To qualify for exemption, the consumptive purpose for a token must be available within 180 days of its sale or transfer and the initial buyer cannot resell or transfer the token until the consumptive purpose is available.
Further, the bill specifies: “The initial buyer provides a knowing and clear acknowledgment that the initial buyer is purchasing the digital token with the primary intent to use the digital token for a consumptive purpose and not for a speculative or investment purpose.”
The Bill states that creating a Colorado Digital Token Act, with limitations to protect consumers, will enable business organizations in the western state that use crypto-economic systems to obtain growth capital to develop their businesses. “This will promote the formation and growth of local companies and the accompanying job creation and help make Colorado a hub for companies that are building new forms of decentralized “web 3.0″ platforms and applications.”
In a similar move, a “Token Taxonomy Act,” seeking to exclude digital tokens from being defined as securities, was introduced in the House of Representatives last month.
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